Retail Sales Crippled by Severe Winter [AUDIO]
Cold weather and higher-than-usual amounts of snowfall across much of the country have hampered post-holiday shopping and spending in the beginning of the year.
Americans spent less on automobiles, clothing and at restaurants in January according to the National Retail Federation. The Commerce Department said that retail sales fell a seasonally adjusted 0.4 percent last month, which marked the second straight decline after a 0.1 percent drop in December.
"Following a solid holiday sales season, it seems that many consumers decided to take a break from the stores and shopping malls this January in an attempt to avoid winter weather," said NRF president and CEO Matthew Shay. "While the dip in retail sales was somewhat anticipated, it is concerning that both jobless claims came in above projections and that consumer spending were flat in January. It's not the way to kick off a new year."
"Harsh winter weather is masking the performance of the broader economy," said NRF chief economist Jack Kleinhenz. "Extreme temperatures and severe ice and snow are making it increasingly difficult to assess if the retail sales slowdown is temporary, or a telling sign of a longer-lasting weakness in the consumer-fueled economy. No one can jump to any solid conclusion until we shovel out of the snow."
Earlier this month the NRF released its annual economic forecast, projecting a 4.1 percent increase in retail sales in 2014.
Other findings from the January retail sales report:
- Building material and garden equipment and supplies dealers stores' sales increased 1.4 percent, seasonally adjusted month-to-month, and 3.3 percent unadjusted year-over-year.
- Clothing and clothing accessories stores' sales decreased 0.9 percent seasonally adjusted month-to-month, yet increased 1.4 percent unadjusted year-over-year.
- Electronics and appliance stores' sales increased 0.4 percent seasonally adjusted month-to-month, yet decreased 4.9 percent unadjusted year-over-year.
- Furniture and home furnishing stores' sales decreased 0.6 percent seasonally adjusted month-to-month, and 2.1 percent unadjusted year-over-year.
- General merchandise stores' sales decreased 0.1 percent seasonally adjusted month-to-month, yet increased 1.4 percent unadjusted year-over-year.
- Health and personal care stores' sales decreased 0.6 percent seasonally adjusted month-to-month, yet increased 3.1 percent unadjusted year-over-year.
- Non-store retailers' sales decreased 0.6 percent seasonally adjusted month-to-month, yet increased 6.5 percent unadjusted year-over-year.
- Sporting goods, hobby, book and music stores' sales decreased 1.4 percent seasonally adjusted month-to-month, and 1.5 percent unadjusted year-over-year.
Many economists had predicted that stronger consumer spending this year would cause growth to accelerate but, along with falling retail sales, several economic reports suggest that growth may have slowed. Factories received fewer orders last month, and the number of Americans who have signed contracts to buy homes has plummeted to its lowest level in more than two years.
There are also signs that the momentum at the end of last year was weaker than initially thought. Retail sales in December were revised downward. What was initially a 0.2 percent gain turned into a 0.1 percent loss.
As for the rest of the year, Kleinhenz doesn't believe January numbers are an indication of more to come.
"I just wouldn't jump to any conclusions based on the pace of spending that we see and even the job creation," Kleinhenz said. "I think we have to really wait for the data to be thought out and I think we'll see some changes in the data in a month or two, and that will give us a better idea of how the economy is doing. Severe weather usually just delays purchases. So what people didn't buy this week, they hopefully might get out and buy next week."
(The Associated Press contributed to this report.)